Italy’s Competition Watchdog Probes Armani and Dior Over Worker Exploitation Claims

Italy’s competition authority announced on Wednesday the initiation of an investigation into luxury fashion giants Armani and Dior over allegations of worker exploitation within their supply chains. According to Reuters, this development follows actions taken by Milan prosecutors earlier this year against several Chinese-owned firms in Italy producing luxury goods for these brands.

In April and June, Milan prosecutors placed several of these firms under administration, accusing them of systematic employee abuse. These firms, which manufacture products for Dior and Armani, were alleged to have subjected workers to inadequate salaries, excessive working hours and unsafe working conditions.

The Italian regulator stated that Armani and Dior have been accused of “emphasizing the craftsmanship and excellence of their workmanship” while relying on workshops that flouted basic labor standards. Inspections were conducted at certain companies within the Armani Group and the Dior Group, which is controlled by LVMH, on Tuesday.

According to the antitrust agency, the two luxury houses are under investigation “for possible unlawful conduct in the promotion and sale of articles and clothing accessories, in breach of the (Italian) Consumer Code.” The regulator suggested that Armani and Dior might have made false ethical and social responsibility claims, particularly concerning the working conditions and legal compliance of their suppliers.

The companies have not yet responded to requests for comment on the allegations.

Violations of the Italian Consumer Code could result in fines ranging from 5,000 euros ($5,456) to 10 million euros ($10.91 million).

In recent years, the luxury industry’s supply chain practices have faced increased scrutiny from both consumers and investors. To safeguard their reputations, many fashion labels have reduced the number of subcontractors they employ and have brought more production processes in-house.

Source: Reuters